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All -- -- at Washington's out of control spending must stop.
Take Social Security the Congressional Budget Office is saying that for the first time in 25 years its annual surplus is nearly gone.
It's expected operating -- -- for the next couple years at least and that's not good news for baby boomers and it might not be any better for the president's big budget points.
Former Social Security deputy commissioner Andrew Biggs says one Social Security is that a red it is unlikely to ever run a surplus again.
Andrew those are scary scary thoughts.
-- -- -- -- -- -- -- -- it's a scary situation for the last three decades.
So -- been running surpluses and the government has used those surpluses about two and a half trillion dollar sell them to high deficits and the rest of the budget.
Now we're seeing the reverse for the first time -- period running deficits again on the CBO thinks to be -- -- -- eight billion dollars this year.
And there's a good chance this system may never come back to surpluses again.
The CBO projects this system we'll come back a slight surplus in about three years.
And then start going into deficits again going to be deficit much larger there -- even seeing today.
That's a real problem instead of subsidizing the budget like we've seen in the past 25 years now the budget has to start repaying and we have no money needed to repay that -- So what does this mean for everyone watching and whose plan is actually paying Social Security right now.
Will they ever will they all get their benefits or -- this mean that some people are just going to be -- a lot.
Well if you're somebody who is currently receiving benefits is very very unlikely they'll ever be cut.
And the reason is politics -- seniors vote at three times the rate that people their twenties do.
So congress will never cut benefits on people who are already receiving them.
But for younger people people -- looking forward to benefits in the future it's a real problem.
They've paid a twelve and half percent payroll tax into the system all their life.
And yet when they retire the system is projected to be insolvent.
And -- either promised benefits which even -- are very generous would be cut by around 25%.
When the people want received nothing but they'll receive much less than they -- Andrew when you say younger you mean 47 and under.
But what is younger both -- -- -- the right now where's the cut off.
Well well in practice the system is technically solvent until around 2037.
But that's relying on -- trust fund which really just a -- -- IOUs that government has written from from one part to the other.
Most of the congressional plans that are out there would not reduce benefits for people who were 55 or older -- people who have been a bit of time before retirement.
And even cuts for people in the fifties will be pretty small but if you're looking at somebody who's in their twenties -- their thirties.
This is a real problem because they're gonna pay higher taxes than they did before.
But they're not gonna receive the full benefits they've been promised.
So I think it's a good program for -- are currently receiving benefits for younger people though is it's and it's a pretty tough situation.
And what about -- you know we look and we read about all these unfunded liabilities and you see that -- clocks and things that you know read words Social Security the unfunded liability -- fourteen trillion.
That those are frightening numbers what exactly does that mean does -- mean that at some point.
It will do.
It will have to raise taxes to a crazy number or just print money to meet these obligations -- probably close that gap.
Well -- there's there's a couple of choices available none of our particularly pretty we can raise taxes if you want to fix Social Security.
By raising taxes we have to increase the tax rate.
-- three and half percentage points today that's a big increase from from what's already the biggest tax that most workers -- Or we could cut benefits by around got 15%.
Doing it today in doing it immediately and permanently.
But if we put off the changes it just gets tougher say you're right we've got some real tough choices ahead.
Printing money is not something we'll fix the Social Security problem but what's likely is Social Security will produce deficits and debt.
And then the temptation to inflate the currency will be even larger -- is really not a road you want to go down.
But congress is so reluctant to take the tough -- so reluctant to raise taxes or cut benefits.
That is a good -- we're gonna -- big deficits for awhile before their forced into action and that's pretty -- -- you know it's interesting you say that because it seems like main street gets this more so than Washington.
How much further can this can be kicked down the road is this the -- is this the end of the road for that.
Well that's a real question how long you can go without changing the system.
You know we can continue like this system start running deficits and his bail it out from the rest of the budget but -- -- the budget doesn't have any money.
So that means we have to run the bigger deficits over -- more public borrowing.
The question is really at what point -- our lenders -- -- -- overseas lenders just say stop.
When they simply say we're not going to lend you any money anymore because you showed no capacity taking the steps you have to take in order to be able to repay it.
We can't say for sure when that will happen we know at some point that'll happen when that happens then you see crash of the dollar EC.
Massive inflation -- higher interest rates -- higher taxes you don't want to go down that road.
But to avoid you have to start today well thanks so much -- being the -- -- good news.
Andrew thanks a lot there really -- --
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